Is this a good time for mergers and acquisitions in San Diego and throughout California?  Mergers and acquisitions activity took a big hit during the economic uncertainties going back to the pandemic, but economic conditions are stable and many say improving.  The San Diego mergers and acquisitions attorneys at the Watkins Firm are poised to facilitate a growing number of deals as we move into the second half of this year.

Why is it possible that the next several business quarters will be a good time for mergers and acquisitions?  Many companies have experienced growth and expect key economic indicators (such as interest rates) to experience positive developments.  Aggressive business and corporate management will be looking to move top-line numbers, and acquiring new business units and/or customers through a merger or acquisition is a proven way to improve growth projections.

Many technological innovations come from small companies focused on particular issues. Buyers will be looking for innovations that they can scoop up through M&A to gain advantages over competitors. Valuation of existing businesses has substantially increased over the past few years and this single factor adds heat to the equation.

Well, we want to have all of the agreements that are applicable that will help the company survive and, and do better. And the way we do that is we have lawyers have been here with, with us for 30 years or more. And we have a transaction formed bank of all of the transactional documents we’ve prepared over the years. And in that 30 or 40 years of transactional documents, our lawyers have probably come across the same type of agreement and the same type of deal you are proposing. We’ll go back and we’ll find maybe four or five of these similar agreements. And we’ll also compare that to our paid litigation research bank. And we’ll make sure it’s current in the law and we’ll run it by you. And then we’ll also be able to tell you as older lawyers that this is what other clients have done and it worked for them. So in addition to just writing up the agreement, as you ask, we can also give practical advice of this is what people did and it didn’t work. And this is what people did and it did work and they’re still around today.

Pro-Tip: “When you own a corporation for a long time, it becomes another person, a citizen, and you get credit for that.  The corporation can sign leases, that corporation can sign vendor contracts, it can get licenses, it can do all kinds of things that have built up, over the years. Whereas if you have a brand new company, you’re guaranteeing everything.

So if you want to buy a company that’s already running, you don’t have to renegotiate everything and you just come over with a good shareholder agreement and a stock purchase. You can step into the shoes of a very successful company and just hope it makes a profit.

Sellers have tax advantages in selling stock. That’s, that’s always good because a, a stock sale on something you’ve held for a long time, it’s going to be taxed at a better rate. Also it’s a cleaner transaction. You just sell the stock, there’s still going to be due diligence and you still have to make representations and warranties about the company.

There’s always something. And as a deal maker, that’s what a transaction lawyer is. You want to come up with creative ways to get the deal done while certain contingencies wait, we have had money and, and trust accounts on deals for two years while a contingency is fulfilled by the seller. So you’ll pay 2 million for a project and there’s $200,000 coming to the company, but it’s not going to come for a while. So the seller will say, well, let’s keep the 200,000 for me in, uh, escrow until the company I’m selling, you gets that 200,000 and we get the deal done. Once the money comes in, then the buyer says release the money to the seller and everybody’s happy. It’s a win – win!”

Recent reporting revealed that many companies have been holding onto cash through the past few years, and used recent tax incentives to buy back stock and as a result now have large cash reserves on hand. Political leaders have been publicly pushing for corporations to use the cash to hire employees, but a lot of this capital is likely to be spent on mergers and acquisitions.

This is a good time for mergers and acquisitions here in San Diego and across the State of California.  Consolidating your company’s hold on existing markets while seeking expansion into new opportunities will require strategic decision making. The Watkins Firm brings over 4 decades of proven, successful experience as one of San Diego’s leading business law and M & A firms providing sound counsel and legal work.

We invite you to review our podcast Episode 13 – Mergers and Acquisitions as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.